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Show Deseret G&T and UP&L sign Hunter II contract In an announcement this week to members of Deseret Generation and Transmission Cooperative (including electric cooperatives serving much of Utah, plus parts of Wyoming and Nevada), Merrill Millett, general manager of Deseret, announced that an agreement had been reached with Utah Power and Light Co. for the purchase of about 40 percent of UP&L's Hunter II plant in Emery County. "We have signed a contract to purchase pur-chase an undivided interest in Hunter II", Mr. Millett stated, as he made the announcement. Although the purchase has been on-again and off-again for the past year, he stated that he felt that they had put together the best possible financing and purchasing arrangement that could be formulated in the time frame involved. The agreement was signed July 23, after several days of negotiations between representatives of the two firms. The stipulations agreed upon included: (1) UP&L will sell to Deseret ' a 39.69 percent undivided interest in Hunter II; (2) a 19.875 percent interest in common facilities; (3) the established price for both cooperative and municipal interests is $166,600,000; (4) the ownership and .management agreement approved by the Commission Com-mission on May 1, 1980, will be revised to provide for the new arrangements; (5) Deseret will have until September 15, 1980, to close (a closing after September Sep-tember 15 would require a 10 percent interest charge); and (6) the Consumer groups will move to have the "construction "con-struction work in progress" appeal which is now pending against UP&L dismissed. The stipulations were signed by all parties, and the Public Service Commission Com-mission approved the terms of the agreement. The new agreement was necessitated after a leveraged lease contract failed to materialize in June prior to the startup start-up of Hunter II. The sale of part of the new generating plant in Emery County by UP&L was "prompted by an opinion by Utah PSC that the sale would benefit the company's com-pany's retail consumers. The Commission felt that since UP&L had been selling to wholesale customers, with these wholesale accounts ac-counts growing faster than retail accounts ac-counts necessitating the construction of more expensive generating capacity, ' this created a situation where retail accounts were paying the cost of generating plant construction to serve wholesale customers. Assistant Attorney General James L. Barker, representing the State Committee Com-mittee of Consumer Services, has long felt that it was improper to allow the cost of construction work in progress to be added to consumer rates. More than a year ago Barker threatened to take the CWIP issue to the supreme court, but deferred the filing as there seemed to be an impending sale to Deseret When the sale fell through in June, the CCS appeal was filed with the supreme court. Mr. Barker stated that they were willing to drop the appeal if the sale is closed, because retail customers in Utah would then no longer be required to subsidize the generating plant for wholesale customers. Mr. Millett in his announcement added that the Hunter purchase will help firm up power supplies for municipal and cooperative users. - However, it will mean an increase in power rates due to the new plant construction costs involved. Inflationary In-flationary trends make each new plant inf irately more expensive than the last, and these costs are borne by the consumer. con-sumer. The addition of the added source of power, however, will create a stable cost factor that will place the cooperatives and municipal systems in a more favorable position as the rate for wholesale power is expected to escalate rather rapidly. |